The National Bank of Georgia’s Monetary Policy Committee has raised the refinancing rate by 0.25 percentage points, bringing it to 8.25%. The central bank linked the decision to the war in the Middle East and the resulting inflationary pressure, noting that inflation in April rose to 5.9%, the highest level in two years.
NBG President Natia Turnava provided clarification, stating that the rate hike aims to manage inflation expectations amid growing external risks and guide inflation back toward the 3% target.
According to Turnava, global uncertainty, geopolitical tensions, and significant inflationary pressure- particularly from world oil and fuel markets - are the main drivers behind the decision. She explained that April’s inflation in Georgia was largely influenced by rising oil and fuel prices internationally, which had a substantial impact on domestic price growth.
Turnava emphasized that Georgia, as an importer of oil and petroleum products, is especially vulnerable to such global price shocks. With no clarity on how long the Middle East conflict will last or how volatile global commodity prices may become, the central bank opted for a small but precautionary increase in the refinancing rate.
“This step is preventive in nature,” Turnava said. “It aims to mitigate inflationary risks being transmitted to Georgia, stabilize expectations, and ensure that price levels remain under control -so inflation can gradually return to the 3% target as soon as conditions allow.”
This marks the first increase in the refinancing rate since May 22, 2024.
